By Lauren Muir, Head of Marketing, Trade Ledger
When I was 12, I spent a lot of time waiting in banks. I remember my dad refusing to leave the building until an approved business loan landed in his account. I remember my mum in tears, having to remortgage our home to pay suppliers and deliver new orders.
My parents are serial entrepreneurs. They’ve dabbled in everything from import/export to kids cooking classes. So much of our dinner table talk was about cash flow problems.
Decades later, these memories remind me how little business lending has changed. SMEs still struggle to get the working capital they need. Even in an age where an artificial intelligence chatbot can diagnose medical conditions or crack jokes to make a human laugh.
The contributors featured in this year's Working Capital Predictions 2023 report give me hope that things are finally changing. And that the change – a shift from talking about problems to solving them – is accelerating.
The insights you’ll read come from experts in every corner of our industry, from the “fin” to the “tech”.
You’ll feel the energy of start-ups, the caution of the giants, and the sharp analysis of consultants. You’ll hear a lot about pulling closer to your customers and reimagining core systems (rather than being distracted by the latest shiny tech).
A car, as they say, is not a fast horse. Likewise, data-driven credit decisions or open banking are not like paper forms and letters of credit. You’ll read about a new modular ecosystem and how important it is to stay flexible when change is constant.
2023 will be tough, and it will be busy. There’ll be winners and losers. But, like one of our contributors says, “the field is wide open”. There’s opportunity for companies that use technology to bridge the funding gap.
The contributions are split into four key themes:
There are nuggets of wisdom across all four themes. For me, these insights stand out:
The technology exists to make embedded working capital as easy to implement as consumer BNPL (buy now pay later). If you don't have an embedded lending strategy yet, make this a priority.
Use data to make more sophisticated and relevant business lending decisions. Lenders who do will win loyalty from business owners.
The funding gap won’t be solved by a single player, but by an ecosystem of specialist providers. Lenders who embrace 'plug and play' flexibility will keep up with an industry in flux.
Whether you’re replacing legacy systems, launching products or making your processes more digital, think transformation, not just automation.
We’re quick to praise SMEs as the backbone of an economy, or drivers of innovation. But 2023 is a year to remember the people who give and risk everything to run those businesses. People like my parents.
To quote another one of our contributors:
Let’s stop talking about how amazing SMEs are, and start helping them in a meaningful way.
Childhood memories shouldn’t be about banks or cash flow. We’ve got the tools now to make sure they aren’t.